Data Sovereignty and Localisation (Focus on Emerging Markets)

However, the reality is quite a bit more complex. Enforcing the storage of data locally will not necessarily improve either the cybersecurity of the organizations storing that data or their maturity in governing that data. Moreover, there may also be cost implications associated with forcing organizations to store their data locally: redundant infrastructure, recruiting limited talent with scarce skills, and maintaining compliance across jurisdictions with disparate processes.

For start-up firms and fintechs operating in emerging economies, these costs may very much stifle their ability to innovate until they reach scale. Emerging firms can benefit from global cloud ecosystems because of their integration. During my tenure leading technology strategy for multinational companies in the retail and media sectors, we had significant success in creating speed through shared platforms and using cross-border expertise to our advantage. If local firms are forced to comply with overly rigid localisation policies, they may unintentionally reduce their ability to access many of the benefits associated with global cloud ecosystems as a result of being isolated from these firms.

Balancing Digital Independence and Global Integration

To dismiss data sovereignty as simply occurring through protectionism would be shortsighted. Many emerging economies have experienced value extraction in prior economic cycles. Therefore, the desire to retain digital value and to provide protection for their citizens is reasonable.

For a more reasonable approach, regulatory frameworks should be developed. For example, industries that are characterised as highly sensitive, such as financial services and healthcare, may warrant stricter requirements regarding data localisation. On the other hand, other industries may be more appropriately served by hybrid or regional data frameworks. By putting in place data classification systems, establishing interoperable technical standards, and creating regional alliances among the private sector, governments can protect their respective citizens without creating additional impediments for organisations that create jobs and grow in the economy.

Therefore, defining data sovereignty in emerging markets is not necessarily about being disconnected from the global economy, but rather it is about negotiating how to engage as a participant in the global economy in a manner that is just as beneficial for them as it is for the participants in developed economies. The challenge is to develop policies that protect a nation’s interests while providing organisations with the ability to be innovative, attract foreign investment, and be competitively viable in the future in a digital economy.